Wednesday, May 16, 2007

Cogent, Year One

When I started Cogent I had a couple of aims, some of which were poorly articulated at the time. I wanted to create an environment that didn't have the employer/employee tension that I experienced in most workplaces; I wanted to be able to work with the people I wanted to on the jobs I wanted to, and be able to say no to the other stuff; and I wanted to create an environment that was attractive to other developers. I'm pleased to say that at lot of this has been accomplished (I can't say that I've accomplished it since lots of people have helped, particularly Marty Andrews), but I'm now also more aware of the limitations of the approach

It's been just over a year since I started consulting again. After doing some Rails and R&D work at IBS I was really lucky to be able to spend three months in Bangalore working with a Wall St bank. It not only gave me a chance to see the Indian Silicon Valley from the inside, so that it's no longer just an abstract concept, it also gave me a chance to catch up with people I hadn't seen since I left New York in 2001. Then I was able to take six weeks off, which was exactly the flexibility that I was looking for when I started consulting, and now I'm working at Sensis with a bunch of good people, including some people working under the Cogent umbrella.

Over that time Marty has gone from being someone simply billing under the Cogent umbrella to effectively being a partner in the business, which has made things both easier and much more interesting. We've got six people billing effectively full time consulting work through Cogent, and another two people billing part of their work that way. Everyone keeps the vast majority of their own revenue, leaving just a little bit for shared expenses. And I've been learning more about accounting and running a business, which has its good and bad points. That's all the good stuff.

What I've become aware of lately is that while the current business model is 'fair', in the sense that everyone keeps they earn, it has some drawbacks, the main one being that there's no financial incentive for collaboration. There's still room for altruism, and none of us are particularly selfish, but financially there's no reason for me to spend time helping someone else build up their skills, or increase the rate they can charge, especially if means spending less time on something that would help me directly. I can live with that situation, but I don't really feel good about it.

As a result, we've started (just started) thinking about different relationships people might have with Cogent, reflecting different levels of risk and independence. The model we have now is great for people with deep skills who are happy to independently find their own work and bear the associated risks. It's not so good for people who want more predictability, or who would like to work more collaboratively, or have someone who was helping them improve their skills. One possibility is a full employment model, though we'd still have our signature financial transparency and profit sharing of some sort. Cogent takes the risk of finding work and paying salaries, and gets a share of profits in return. The employee gets security and predictability, and gives up some of their revenue in return - it's a pretty traditional model at the core. But we'd expect people to eventually move away from this into a looser arrangement, where they bear more of the risk and get more of the revenue, and eventually into the associate arrangements that we have now. We'd want to have enough flexibility so that no one needed to completely abandon Cogent as their needs and contributions changed.

Early days yet. We'll have to see what happens.

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